‘Fair Play, Fair Pay’ Radio-Royalty Act Gains Momentum, But Faces Uphill Climb

U.S. Capitol
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The recording industry is gaining traction with its Fair Play Fair Pay Act, which has added 15 more bi-partisan sponsors since its introduction March 30. The bill, H.R. 1836, now has the support of 21 house members who support radio stations paying artists and labels for airplay — the United States is the only major country in the world that does not pay such royalties. It is adamantly opposed by the National Association of Broadcasters, which over the decades has managed to beat back past efforts.

This time, resistance to the bill may face greater challenges if radio performance royalties get swept up in a broader push to reevaluate copyright law in the digital era. Terrestrial radio stations manage to avoid paying royalties to artists and labels because such airplay is considered “promotional,” even though streaming services and broadcast television networks do. As services blur and consumers discover music through a variety of outlets, it has become harder to justify a radio exemption, according to the Recording Academy’s Chief Industry, Government and Member Relations Officer Daryl Friedman.

Friedman feels the Republican-led congress will be eager to close the “loophole” that prevents about $200 million in overseas revenue from being repatriated to U.S. artists and record companies. “There is so much talk about shipping jobs overseas. Here is $200 million in taxable income that we are not even letting into our country, that artists earn but don’t receive,” Friedman said.

While most countries collect performance royalties, they don’t submit U.S. payments because there is no reciprocity for foreign artists. Due to the popularity of U.S. acts abroad (a trade surplus), the country is getting shortchanged, Friedman said. Foreign royalty rates generally fall in the 3-5% range.

While the Fair Play Fair Pay bill stipulates the U.S. rate be determined by the rate court, the performing rights organizations (PROs, like ASCAP and BMI) collect for publishers and songwriters an estimated 3-5% annually from radio stations, based on a complex revenue formula that takes into account everything from tower watts to number of listeners. Revenue for the U.S. over-the-air radio market was $14.1 billion in 2016, according to investment analyst BIA Kelsey. Assuming half those are talk or news format, even a lowball estimate of 3% would put potential artist and label earnings above $200 million.

Although the recording industry has failed on this measure in the past, Friedman feels conditions are favorable this time around. Others are not as confident. “Of course the creative community would like to see the Fair Play Fair Pay Act pass since we are the only modern country in the world that does not recognize this right, but lies spread about the bill make it a tough hill to climb,” said LaPolt Law’s Dina LaPolt, an entertainment attorney who is involved in policy issues on behalf of the music creator community.

Meanwhile, the NAB is dismissive of the bill’s 21 signatories, touting the fact that its own Local Radio Freedom Act has 217 congressional supporters. “We’re optimistic Fair Play Fair Pay won’t become law given strong bipartisan support for the Local Radio Freedom Act,” NAB spokesman Dennis Wharton said.

But the Local Radio Freedom Act is a non-binding resolution — basically a statement of support. While it does say “Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over the air,” it does not have the power of legislation, nor the power to stop new law from being made. The NAB’s position is that it would be difficult for the 185 representatives and 22 senators to change their position in a vote.

Friedman isn’t so sure. Since H.R. 1836 addresses many of the NAB’s previous complaints – including a flat fee for small radio stations capped at $500 per year – he feels the bill can attract converts. With 435 house members and 100 in the senate, plenty of votes remain up for grabs. “With each passing day, the need for reform of outdated laws is more clear. Key leaders on Capitol Hill recognize that and support for the music community’s efforts continue to grow,” the Recording Industry Association of America EVP public policy and industry relations Michele Ballantyne said. “That’s good news, and it’s our job to keep pressing for concrete action. We’re steadily making progress.”

Many bills die in committee, and this one is perched in the House Judiciary, where it landed on March 30, introduced by Rep. Jerrold Nadler (D-NY). Supporters are optimistic it can move to a floor vote after summer recess. Since its debut, the Fair Play Fair Pay Act has received the support of Reps. Steve Cohen (D-TN), Joseph Crowley (D-NY), Scott R. Tipton (R-CO), Julia Brownley (D-CA), Luis V. Gutierrez (D-IL), Karen Bass (D-CA), Louise McIntosh Slaughter (D-NY), Judy Chu (D-CA), Adam B. Schiff (D-CA), Carolyn B. Maloney (D-NY), David N. Cicilline (D-RI), Trent Franks (R-AZ), Ted Lieu (D-CA), Pete Aguilar (D-CA), and Darren Soto (D-FL).

Its original co-sponsors – Reps. Marsha Blackburn (R-TN), John Conyers Jr. (D-MI), Darrell E. Issa (R-CA), Theodore E. Deutch (D-FL) and Thomas J. Rooney (R-FL) – joined Nadler in launching the bill on the eve of the Recording Academy’s Grammys on the Hill, a two-day advocacy event culminating in an April 5 concert featuring Keith Urban and Winona Judd at D.C.’s the Hamilton nightspot.